GST rollout looks unlikely by Apr 1

New Delhi: The Centre and states failed to approve the GST laws on Sunday and agreed to meet on December 22 and 23 to hammer out a consensus, dashing hopes that the crucial bills would be introduced in the ongoing winter session of Parliament and making it tough to meet the April 1 rollout date for the goods and services tax (GST) across the country.

Finance minister Arun Jaitley said some states had urged that Monday’s meeting be deferred as it was a holiday due to Eid-e-Milad and the council agreed to meet later in December.

“Today we had a discussion which was exclusively on the legislative drafting. So bulk of the critical provision we have approved today,” Jaitley told reporters after the meeting. “There is one section which needs to be redrafted… one cross empowerment issue which we are leaving aside and therefore the discussion on the legislation and its approval each section is moving satisfactorily. And hopefully in the next meeting we would be able to clear it,” he said.

The Centre and states have been locked in a logjam over the issue of administrative control after post-implementation of GST. After the Centre’s stunning decision on demonetisation, politics seems to have intruded with states like West Bengal arguing that the decision to scrap some high-value notes will impact GST revenues. Tamil Nadu, Kerala and Bihar have also sought administrative control over both goods and services below the Rs 1.5 crore threshold.

“Well, that issue did not come up for discussion today because today’s agenda was taken up exclusively by the legislation and that’s an issue which is still flagged and still pending. I have various options ready for discussion and as and when it is discussed we will place those options before the council,” Jaitley said when asked whether the issue of dual control was discussed.

He said the government still stands by the April 1 rollout date. The government has identified the rollout of GST as one of its key reform priorities. “I told you after the last meeting also our target is the 1st of April. The luxury of time is not available to us for the simple reason that if 1st April is the first possible day it can be implemented, then the last date also is constitutionally defined as 16th of September 2017,” the FM said.
“So the discretion as to when to implement is only five months and 16 days and that’s why we don’t have the luxury of time because after five months the curtains will be down on the old taxation powers,” he said pointing to the need to implement the tax reform measure within the defined dates.

The government was keen to introduce the GST bills in the winter session of Parliament but now it appears that the legislations may be placed in the budget session which starts in January. “As and when we finalise the issues before the Council and there is a consensus before the Council, we will answer the question at that stage,” the FM said when asked if the bills will be introduced in the budget session.

Tax experts said the April 1 GST rollout deadline will be missed. “It’s unfortunate that there was not much headway in the GST Council meeting. The only silver lining was that substantial progress seems to have been made on discussions with respect to laws and broad consensus was reached for provisions up to Chapter 20 (out of total 27 chapters),” said Pratik Jain, partner and leader indirect tax, at consultancy firm PwC.

“Having missed the winter session, one would hope that Centre and states would be able to work together to make it happen in the budget session. April 1, 2017 seems a stretched target now and a minimum of 3 months delay looks quite imminent.”